Pyxus advances strategic growth initiatives
MORRISVILLE, N.C.,
June 14, 2019 /CNW/ -- Pyxus International, Inc. (NYSE:
PYX), a global value-added agricultural company, today announced
results for its quarter and fiscal year ended March 31,
2019.
Highlights
Fiscal 2019
- Full service volumes increased 4.9% to 400.5 million kilos in
fiscal 2019 despite the impact of Hurricane Florence and foreign
tariffs on U.S. tobacco.
- Sales and other operating revenues decreased $44.4 million or 2.4% from $1,846.0 million for the fiscal year ended
March 31, 2018 to $1,801.6 million for the fiscal year ended
March 31, 2019.
- Selling, general, and administrative expense ("SG&A")
increased $24.5 million or 16.5% from
$148.3 million for the fiscal year
ended March 31, 2018 to $172.8 million for the fiscal year ended
March 31, 2019, primarily due to
start-up costs associated with the development of new business
lines.
- Gross profit as a percent of sales increased from 13.3% for the
fiscal year ended March 31, 2018 to
13.9% for the fiscal year ended March 31,
2019.
- Net loss attributable to Pyxus International, Inc. was
$70.5 million for the fiscal year
ended March 31, 2019, a difference of
$122.9 million or 234.5% from net
income of $52.4 million for the
fiscal year ended March 31,
2018.
- Adjusted EBITDA* for the fiscal year ended March 31, 2019 was $163.3
million, above the Company's most recently announced
guidance.
- The Company purchased $27.3
million of its existing 9.875% senior secured second lien
notes due 2021 at a discount resulting in debt retirement income of
$1.8 million and a remaining face
amount of $635.7 million.
- Year-end uncommitted inventory was the lowest it's been since
fiscal 2011, consistent with our working capital strategy.
Fourth Quarter
- Full service volumes increased 4.3% to 131.9 million kilos in
fiscal 2019 despite the impact of Hurricane Florence and foreign
tariffs on U.S. tobacco.
- Sales and other operating revenues decreased $52.7 million or 8.2% from $643.9 million for the three months ended
March 31, 2018 to $591.2 million for the three months ended
March 31, 2019.
- Gross profit as a percent of sales increased from 11.6% for the
three months ended March 31, 2018 to
14.5% for the three months ended March 31,
2019.
- SG&A increased $8.1 million
or 17.6% from $46.0 million for the
three months ended March 31, 2018 to
$54.1 million for the three months
ended March 31, 2019.
- Continued execution on the Company's "One Tomorrow"
transformation strategy, including significant progress on the
expedited build-out by its Canadian cannabis subsidiaries and the
opening of Criticality's industrial hemp extraction and
purification facility.
____________
*Adjusted EBITDA is not a measure of results under generally
accepted accounting principles in the
United States. See the reconciliation tables included in
this press release for details regarding the calculation of
Adjusted EBITDA.
____________
Pieter Sikkel, President, CEO and
Chairman said, "Over the past fiscal year, we have accomplished
real change at Pyxus International. From investing in
differentiated capabilities across our entire portfolio to ensure
we are uniquely positioned to capitalize on growth opportunities to
propelling our leaf business forward through cultural and
operational changes, we are committed to creating value through
innovation for our customers, our partners and our
shareholders.
"Our financial performance this year is a reflection of the
strong performance of our leaf business as well as the significant
investment in our new business ventures. Our leaf team addressed
challenging market conditions with efficiency and agility,
resulting in a 4.9% increase in full service volumes to 400.5
million kilos. Sales and other operating revenues decreased 2.4% to
$1,801.6 million primarily due to a
decrease in leaf volumes attributable to Hurricane Florence that
reduced the U.S. crop size and foreign tariffs on U.S. tobacco.
These decreases were offset by an increase in leaf volume, mainly
attributable to larger crops in Africa, the timing of leaf shipments in
South America and the continued
development of the Other Products and Services segment. Gross
profit as a percent of sales increased from 13.3% for the year
ended March 31, 2018 to 13.9% for the year ended
March 31, 2019.
"SG&A increased 16.5%, driven primarily by the requirements
of the Company's new business ventures and related start-up costs
as we continue to build out our Canadian cannabis manufacturing
facilities in the provinces of Prince
Edward Island and Ontario,
as well as invest in marketing and advertising for our e-liquids
businesses. These increases were offset by our cost-saving and
restructuring initiatives in the leaf business, and we finished the
year above our anticipated Adjusted EBITDA guidance range at
$163.3 million. We remain focused on
long-term debt reduction and have reduced our second lien notes to
$635.7 million at March 31,
2019.
"We continue to see the benefit in the implementation of
strategic initiatives to enhance the leaf business. For example,
year-end uncommitted inventory was the lowest it's been since
fiscal 2011, consistent with our working capital strategy. Despite
challenges, particularly those in the African market, our tobacco
shipments were minimally impacted and we executed largely as
planned. While the cyclone that struck Mozambique, Zimbabwe and Malawi had some impact on operations, we were
able to mitigate the extent to which our operations were affected
and, most importantly, have been successful in our ability to
provide support to the individuals and families that suffered the
effects of the storm. Pyxus helped drive significant fundraising
efforts across the industry. We will continue to work to provide
assistance to these areas as they look to rebuild in the coming
months. We have managed the unfavorable weather and logistical
challenges of fiscal 2019 and our leaf business is tracking towards
a normal performance taking into consideration these two factors
for the first half of fiscal 2020.
"Turning to the performance of our global new business ventures,
we are seeing ongoing acceleration in growth and are confident that
our talented teams will continue to propel these businesses
forward. Across all categories - legal Canadian cannabis,
industrial hemp and e-liquids - these businesses remain on track to
generate significant revenue and profit by 2020.
"When we first announced our transformation, we stated that we
were entering into new potentially higher-margin business lines to
deliver enhanced value to shareholders. In line with that
objective, we are evaluating the consolidation of Pyxus' ownership
in its two majority-owned Canadian cannabis businesses (i.e., FIGR
Norfolk and FIGR East (licensed as "Canada's Island Garden"), collectively,
"FIGR") with two of its minority-owned U.S. hemp and e-liquids
businesses (i.e., Criticality and Purilum, respectively) under the
common control of a subsidiary separate from Pyxus' other
operations. Pyxus is assessing its opportunities to monetize a
portion of its interests in this subsidiary in fiscal 2020.
"FIGR continues to be a leader in share in the Maritime
provinces in Canada, with strong
positions across categories. Since the legalization of recreational
cannabis last fall, FIGR has maintained a strong market share
position across all categories in Prince
Edward Island and Nova
Scotia by staying to true to its commitment to only sell
into provinces it can adequately supply. Earlier this week, FIGR
announced its expansion into its third Canadian East Coast market,
New Brunswick. The introduction of
FIGR products in New Brunswick
grows FIGR's retail distribution as it continues to execute on its
strategy to enter new provinces.
"FIGR intends to enhance its position through its commitment to
increase local capacity, expected to be more than 140,000 kilograms
annually. FIGR's Simcoe, Ontario
facility, FIGR Norfolk (formerly licensed as Goldleaf Pharm Inc.)
recently announced that the company had begun excavation and
tree-clearing on the 20-acre parcel of land slated for phase two of
its approximately 800,000 square foot expansion project. Phase two
of the FIGR Norfolk build-out involves the construction of an
approximately 200,000 square foot, state-of-the-art, modular indoor
concept cultivation facility expected to be complete by the end of
2020, with associated revenue and profitability expected in early
to mid-2021. The build-out of FIGR East also remains on track with
the completion of phase one targeted for the coming weeks and the
completion of phase two expected by the end of the calendar
year.
"Our unconsolidated industrial hemp joint venture, Criticality,
LLC, opened its 55,000-square-foot industrial hemp extraction and
purification facility in Wilson, North
Carolina this quarter. In May, Criticality announced the
release of its professional line of CBD products, Korent Select,
which are only available for sale to health care professionals.
This is in addition to their Korent oil drop and e-liquid products,
which were released in December 2018
and January 2019 respectively.
Additional new product launches are expected later this year.
"The e-liquids category continues to grow, with sales for the
fourth quarter across its collection of brands exceeding sales in
any prior quarter. Specifically looking at Humble Juice Co. and
Bantam, Humble is working to expand its product line with a launch
of CBD products in the second half of 2019. Bantam recently
launched its rebranding and new packaging.
"At the core of ensuring that we are delivering on our
commitment to provide high-quality products and services to our
customers, is SENTRISM, our proprietary blockchain-type
platform which provides visibility into a products' source to
market journey. This quarter, we are proud to share that we
released SENTRI for Bantam and are working to enhance SENTRI
capabilities for Korent and Purilum as well. We have no doubt that
SENTRI will continue to provide a competitive advantage among our
partners and consumers as the demand for greater product
transparency continues to grow.
"As our business continues to evolve, we see a great opportunity
in the advancement of our agronomy services, which focus on the
development of value added agricultural products, and is a
continuation of our strategy to move into areas of growth. In May,
our affiliate, Pyxus Agriculture Limited Tanzania received the
merger clearance certificate from the Tanzania Fair Competition
Commission for the acquisition of an oil mill and refinery
operation located in Dodoma which provides Pyxus with the ability
to extract and sell sustainable sunflower oil in various product
formats for human consumption as well as seed cake for animal feed.
The purchase of the sunflower oil mill and refinery is yet another
example of how Pyxus continues to evolve and diversify, expanding
as a global agricultural company with CPG capabilities and
signifying that we are entering the next phase of our company's
transformation.
"We are pleased with our growth and pace of innovation, and we
are encouraged by the substantial progress that we have made in our
transformation efforts this past year. As we manage our new
business lines and our existing leaf business, we expect sales to
be in a range of approximately $1.850
billion to $1.950 billion and
Adjusted EBITDA in a range of approximately $160 million to $180
million for the fiscal year ending March 31, 2020. As we continue to execute our
vision, we will not lose sight of our greater purpose: to transform
people's lives so that together we can grow a better world."
Performance Summary for Fiscal Year Ended March 31,
2019
Sales and other operating revenues decreased $44.4 million
or 2.4% from $1,846.0 million for the
year ended March 31, 2018 to $1,801.6
million for the year ended March 31, 2019. This
decrease was primarily due to a decrease in leaf volumes in
North America attributable to
Hurricane Florence reducing the U.S. crop size, foreign tariffs on
U.S. tobacco, and a decrease in leaf average sales price of 7.3%
primarily due to product mix and geographic sales mix. These
decreases were offset by the continued development of the Other
Products and Services segment and a 4.9% increase in total leaf
volume to 400.5 million kilos mainly attributable to larger crops
in Africa and the timing of leaf
shipments in South America.
Cost of goods sold decreased $49.0
million or 3.1% from $1,599.8
million for the year ended March 31, 2018 to
$1,550.8 million for the year ended
March 31, 2019. This decrease was primarily due to product mix
and geographic sales mix.
Gross profit as a percent of sales increased from 13.3% for the
year ended March 31, 2018 to 13.9% for the year ended
March 31, 2019. This increase was primarily due to lower leaf
conversion costs in Africa from
higher factory throughput driven by higher volumes, the favorable
exchange impact on local currency costs, primarily in South America and Europe, and the continued development of the
Other Products and Services segment. This increase was offset by
higher leaf conversion costs in North
America attributable to Hurricane Florence reducing the U.S.
crop size.
SG&A increased $24.5 million or 16.5% from $148.3 million for the year ended March 31,
2018 to $172.8 million for the year
ended March 31, 2019. This increase was primarily due to
start-up costs associated with the development of the cannabinoid
manufacturing facilities in the provinces of Prince Edward Island and Ontario in Canada, marketing expenses for the FIGR
cannabinoid brand and the Humble Juice e-liquids brand, and the
acquisition of an additional cannabis cultivation license from
Health Canada. These increases were offset by leaf cost-saving and
restructuring initiatives. SG&A as a percent of sales increased
from 8.0% for the year ended March 31, 2018 to 9.6% for the
year ended March 31, 2019.
Restructuring and asset impairment charges of $4.9 million for the year ended March 31,
2019 were due to the closing of one foreign processing facility in
order to process tobacco in the affected area under a third-party
processing arrangement going forward and the consolidation of the
Company's U.S. green tobacco processing operations into its
Wilson, North Carolina facility
and the repurposing of its Farmville,
North Carolina facility for storage and special
projects.
Income tax expense increased $96.6
million or 164.3% from $(58.8)
million for the year ended March 31, 2018 to
$37.8 million for the year ended
March 31, 2019. This increase was primarily due to a one-time
benefit related to the enactment of the U.S. corporate income tax
law in December 2017, recorded in tax
expense for the year ended March 31, 2018.
Performance Summary for the Fourth Fiscal Quarter Ended
March 31, 2019
Sales and other operating revenues decreased $52.7 million
or 8.2% from $643.9 million for the
three months ended March 31, 2018 to $591.2 million for the three months ended
March 31, 2019. This decrease was primarily due to a decrease
in leaf volumes in North America
attributable to Hurricane Florence reducing the U.S. crop size and
foreign tariffs on U.S. tobacco as well as a 12.0% decrease in leaf
average sales price primarily due to product mix and geographic
sales mix. These decreases were offset by the continued development
of the Other Products and Services segment and a 4.3% increase in
total leaf volume to 131.9 million kilos mainly attributable to
larger crops in Africa and the
timing of leaf shipments in South
America.
Cost of goods sold decreased $63.4
million or 11.1% from $569.1
million for the three months ended March 31, 2018 to
$505.7 million for the three months
ended March 31, 2019. This decrease was primarily due to
product mix and geographic sales mix.
Gross profit as a percent of sales increased from 11.6% for the
three months ended March 31, 2018 to 14.5% for the three
months ended March 31, 2019. This increase was primarily due
to lower leaf conversion costs in Africa from higher factory throughput driven
by higher volumes, the favorable exchange impact on local currency
costs, primarily in South America
and Europe, and the continued
development of the Other Products and Services segment. These
increases were offset by higher leaf conversion costs in the U.S.
from lower factory throughput driven by reduced volumes.
SG&A increased $8.1 million or 17.6% from $46.0 million for the three months ended
March 31, 2018 to $54.1 million
for the three months ended March 31, 2019. This increase was
primarily due to start-up costs associated with the development of
the cannabinoid manufacturing facilities in the provinces of
Prince Edward Island and
Ontario and marketing expenses for
the FIGR cannabinoid brand. SG&A as a percent of sales
increased from 7.1% for the three months ended March 31, 2018
to 9.2% for the three months ended March 31, 2019.
Restructuring and asset impairment charges of $1.6 million for the three months ended
March 31, 2019 were primarily related to a cost-saving and
restructuring initiative to consolidate the Company's U.S. green
tobacco processing operations in Farmville, North Carolina into the
Wilson, North Carolina facility
and repurpose the Farmville
facility for storage and special projects.
Earnings Per Share
Fiscal Year 2019
For the fiscal year ended March 31, 2019, Pyxus reported a
net loss of $70.5 million, or
$7.78 per basic share, compared to
net income of $52.4 million, or
$5.83 per basic share, for the fiscal
year ended March 31, 2018. Net loss in the current year
includes $39.6 million of SG&A
costs related to the start-up of new business ventures compared to
$3.3 million in the prior year
period. Additionally, there was a one-time benefit related to the
enactment of the U.S. corporate income tax law in December 2017, recorded in tax expense for the
year ended March 31, 2018, that positively impacted fiscal
year 2018.
Fourth Quarter 2019
For the three months ended March 31, 2019, the Company
reported a net loss of $10.0 million,
or $1.10 per basic share, compared to
a net loss of $4.5 million, or
$0.50 per basic share, for the three
months ended March 31, 2018. Net loss in the current year
includes $15.7 million of SG&A
costs related to the start-up of new business ventures compared to
$2.8 million in the prior year
period.
Liquidity and Capital Resources
The Company's liquidity requirements are affected by various
factors including crop seasonality, foreign currency and interest
rates, green tobacco prices, customer mix, crop size and quality,
and the extent and timing of facilities expansions. During the year
ended March 31, 2019, the Company utilized surplus cash to
reduce long-term debt with the purchase and cancellation of
$27.3 million of its 9.875% senior
secured second lien notes, leaving $635.7
million outstanding at March 31, 2019. At year end, the
Company's available credit lines and cash totaled $608.4 million. The Company will continue to
monitor and adjust funding sources as needed to enhance and drive
various business opportunities that maintain flexibility and meet
cost expectations.
Financial Results Investor Call
The Company will hold a conference call to report financial
results for the period ended March 31, 2019, on June 17, 2019 at 5:00 P.M.
ET. The dial in number for the call is (646) 828-8193 or
(888) 394-8218 if outside the U.S., using conference ID 6008987.
Those seeking to listen to the call may access a live broadcast on
the Pyxus International website. Please visit www.pyxus.com 15
minutes in advance to register.
For those who are unable to listen to the live event on
June 17, 2019, a replay will be
available for five days by dialing (719) 457-0820 within the U.S.
or (888) 203-1112 outside the U.S., and entering the access code
6008987. Any replay, rebroadcast, transcript or other reproduction
of this conference call, other than the replay accessible by
calling the number above, has not been authorized by Pyxus
International and is strictly prohibited. Investors should be aware
that any unauthorized reproduction of this conference call may not
be an accurate reflection of its contents.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995.
These statements are based on current expectations of future
events. Such statements include, but are not limited to, statements
about future financial and operating results, plans, objectives,
expectations and intentions and other statements that are not
historical facts. Such statements are based on the current beliefs
and expectations of management and are subject to significant risks
and uncertainties. If underlying assumptions prove inaccurate or
known or unknown risks or uncertainties materialize, actual results
may differ materially from those currently anticipated expected or
projected. The following factors, among others, could cause actual
results to differ from those expressed or implied by the
forward-looking statements: changes in the timing of anticipated
shipments, changes in anticipated geographic product sourcing,
political instability, currency and interest rate fluctuations,
shifts in the global supply and demand position for tobacco
products, changes in tax laws and regulations or the interpretation
of tax laws and regulations, resolution of tax matters, adverse
weather conditions, changes in costs incurred in supplying products
and related services, uncertainties with respect to the impact of
regulation associated with our new business lines, including the
risk of obtaining anticipated regulatory approvals in Canada, uncertainties regarding the regulation
of the production and distribution of hemp products and continued
compliance with applicable regulatory requirements, uncertainties
with respect to the development of the industries and markets of
our new business lines, consumer acceptance of products offered by
our new business lines, uncertainties with respect to the timing
and extent of retail and product-line expansion; the impact of
increasing competition in the new business lines, uncertainties
regarding obtaining financing to fund FIGR Norfolk's planned
facilities expansion, the possibility of delays in the completion
of anticipated facilities expansions and uncertainties regarding
the potential production yields of new or expanded facilities, as
well as the progress of legalization of cannabis for medicinal and
adult recreational uses in other jurisdictions. Additional factors
that could cause results to differ materially from those expressed
or implied by forward-looking statements can be found in Pyxus'
most recent Annual Report on Form 10-K for the period ended
March 31, 2019 and the other filings with the Securities and
Exchange Commission (the "SEC") which are available at the SEC's
Internet site (http://www.sec.gov).
Non-GAAP Financial Information
This press release contains financial measures that have not
been prepared in accordance with generally accepted accounting
principles in the United States (
"GAAP"). They include EBITDA and Adjusted EBITDA. Tables showing
the reconciliation of these non-GAAP financial measures are
attached to the release.
The range of Adjusted EBITDA anticipated for fiscal year ending
March 31, 2020 is calculated in a
manner consistent with the presentation of Adjusted EBITDA in the
attached tables. Because of the forward-looking nature of this
estimate of Adjusted EBITDA, it is impractical to present a
quantitative reconciliation of such measure to a comparable GAAP
measure, and accordingly no such GAAP measure is being
presented.
About Pyxus International, Inc.
Pyxus International Inc. (NYSE: PYX) is a global agricultural
company with 145 years' experience delivering value-added products
and services to businesses and customers. Driven by a united
purpose—to transform people's lives, so that together we can grow a
better world—Pyxus International, its subsidiaries and affiliates,
are trusted providers of responsibly sourced, independently
verified, sustainable and traceable products and ingredients. For
more information, visit www.pyxus.com.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended
March 31,
|
Fiscal Year
Ended
March 31,
|
(in thousands,
except per share data)
|
2019
|
2018
|
2019
|
2018
|
Sales and other
operating revenues
|
$
|
591,241
|
|
$
|
643,851
|
|
$
|
1,801,593
|
|
$
|
1,845,966
|
|
Cost of goods and
services sold
|
505,737
|
|
569,127
|
|
1,550,779
|
|
1,599,775
|
|
Gross
profit
|
85,504
|
|
74,724
|
|
250,814
|
|
246,191
|
|
Selling, general, and
administrative expenses
|
54,072
|
|
46,039
|
|
172,831
|
|
148,287
|
|
Other income,
net
|
744
|
|
4,472
|
|
14,217
|
|
14,382
|
|
Restructuring and
asset impairment charges
|
1,556
|
|
382
|
|
4,946
|
|
382
|
|
Operating
income
|
30,620
|
|
32,775
|
|
87,254
|
|
111,904
|
|
Debt retirement
expense (benefit)
|
—
|
|
—
|
|
(1,753)
|
|
(2,975)
|
|
Interest
expense
|
33,370
|
|
33,174
|
|
135,553
|
|
134,279
|
|
Interest
income
|
1,041
|
|
975
|
|
3,629
|
|
3,271
|
|
(Loss) income before
income taxes and other items
|
(1,709)
|
|
576
|
|
(42,917)
|
|
(16,129)
|
|
Income tax expense
(benefit)
|
10,940
|
|
7,469
|
|
37,840
|
|
(58,764)
|
|
Equity in net income
of investee companies
|
2,738
|
|
2,150
|
|
9,589
|
|
9,271
|
|
Net (loss)
income
|
(9,911)
|
|
(4,743)
|
|
(71,168)
|
|
51,906
|
|
Net income (loss)
attributable to noncontrolling interests
|
68
|
|
(242)
|
|
(701)
|
|
(530)
|
|
Net (loss) income
attributable to Pyxus International, Inc.
|
$
|
(9,979)
|
|
$
|
(4,501)
|
|
$
|
(70,467)
|
|
$
|
52,436
|
|
(Loss) earnings per
share:
|
|
|
|
|
Basic
|
$
|
(1.10)
|
|
$
|
(0.50)
|
|
$
|
(7.78)
|
|
$
|
5.83
|
|
Diluted
|
$
|
(1.10)
|
|
$
|
(0.50)
|
|
$
|
(7.78)
|
|
$
|
5.81
|
|
Weighted average
number of shares outstanding:
|
|
|
|
|
Basic
|
9,072
|
|
9,012
|
|
9,054
|
|
8,989
|
|
Diluted
|
9,072
|
|
9,012
|
|
9,054
|
|
9,022
|
|
RECONCILIATION OF
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION ("ADJUSTED EBITDA")(1)
(Unaudited)
|
|
|
Three Months
Ended
|
Fiscal Year
Ended
|
(in
thousands)
|
March 31,
2019
|
March 31,
2018
|
March 31,
2017
|
March 31,
2019
|
March 31,
2018
|
March 31,
2017
|
Net (loss) income
attributable to Pyxus International, Inc.
|
$
|
(9,979)
|
|
$
|
(4,501)
|
|
$
|
(309)
|
|
$
|
(70,467)
|
|
$
|
52,436
|
|
$
|
(62,928)
|
|
Plus: Interest
expense(2)
|
33,370
|
|
33,174
|
|
35,782
|
|
135,553
|
|
134,279
|
|
135,441
|
|
Plus: Income tax
expense (benefit)
|
10,940
|
|
7,469
|
|
2,707
|
|
37,840
|
|
(58,764)
|
|
23,480
|
|
Plus: Depreciation
and amortization expense
|
8,860
|
|
8,753
|
|
8,617
|
|
35,747
|
|
33,598
|
|
34,476
|
|
EBITDA(1)
|
43,191
|
|
44,895
|
|
46,797
|
|
138,673
|
|
161,549
|
|
130,469
|
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
4,685
|
|
(29)
|
|
(2,744)
|
|
6,821
|
|
(152)
|
|
(5,545)
|
|
Plus: Non-cash
employee stock based compensation
|
389
|
|
320
|
|
371
|
|
1,544
|
|
1,135
|
|
1,551
|
|
Less: Other
income
|
744
|
|
4,472
|
|
584
|
|
14,217
|
|
14,382
|
|
4,896
|
|
Plus: Fully reserved
recovery of tax(3)
|
3,567
|
|
4,937
|
|
3,167
|
|
10,418
|
|
11,835
|
|
9,356
|
|
Plus: Restructuring
and asset impairment charges
|
1,556
|
|
382
|
|
307
|
|
4,946
|
|
382
|
|
1,375
|
|
Plus: Costs
associated with transformation related to "One Tomorrow" new
business initiatives, not anticipated to be recurring
costs(4)
|
5,338
|
|
1,997
|
|
150
|
|
8,127
|
|
6,593
|
|
150
|
|
Plus: Costs
associated with reorganization of legal entities(5)
|
613
|
|
267
|
|
—
|
|
1,543
|
|
469
|
|
—
|
|
Plus: Costs
associated with the 2017 U.S. Tax Reform Act(6)
|
593
|
|
531
|
|
—
|
|
1,657
|
|
531
|
|
—
|
|
Plus: Debt retirement
benefit
|
—
|
|
—
|
|
(2,639)
|
|
(1,753)
|
|
(2,975)
|
|
(300)
|
|
Plus: Amortization of
basis difference - CBT investment(7)
|
440
|
|
354
|
|
310
|
|
1,551
|
|
1,519
|
|
1,518
|
|
Plus: One time impact
of newly imposed Argentinian Excise Tax(8)
|
319
|
|
—
|
|
—
|
|
2,818
|
|
—
|
|
—
|
|
Plus: Kenyan
investigation legal & professional costs
|
8
|
|
49
|
|
1,606
|
|
308
|
|
1,980
|
|
7,171
|
|
Less: Kenyan green
leaf operation Adjusted EBITDA(9)
|
(302)
|
|
107
|
|
(1,625)
|
|
(882)
|
|
(2,329)
|
|
(8,013)
|
|
Adjusted
EBITDA(1)
|
$
|
60,257
|
|
$
|
49,124
|
|
$
|
48,366
|
|
$
|
163,318
|
|
$
|
170,813
|
|
$
|
148,862
|
|
Total debt
|
|
|
|
$
|
1,327,679
|
|
$
|
1,347,584
|
|
$
|
1,428,868
|
|
Less: Cash
|
|
|
|
192,043
|
|
264,660
|
|
473,110
|
|
Total debt less
cash
|
|
|
|
$
|
1,135,636
|
|
$
|
1,082,924
|
|
$
|
955,758
|
|
(Total debt less
cash) /Adjusted EBITDA(1)
|
|
|
|
6.95x
|
|
6.34x
|
|
6.42x
|
|
|
(1)
|
Earnings before
interest, taxes, depreciation and amortization ("EBITDA") and
adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") are not measures of results of
operations under generally accepted accounting principles in the
United States ("U.S. GAAP") and should not be considered as an
alternative to other U.S. GAAP measurements. We have presented
EBITDA and Adjusted EBITDA to adjust for the items identified above
because we believe that it would be helpful to the readers of our
financial information to understand the impact of these items on
our reported results. This presentation enables readers to better
compare our results to similar companies that may not incur the
sporadic impact of various items identified above. Management
acknowledges that there are many items that impact a company's
reported results and this list is not intended to present all items
that may have impacted these results. EBITDA, Adjusted EBITDA and
any ratios calculated based on these measures are not necessarily
comparable to similarly-titled measures used by other companies or
appearing in our debt obligations or agreements. EBITDA and
Adjusted EBITDA as presented may not equal column or row totals due
to rounding.
|
(2)
|
As a result of
adoption of standard ASU No. 2017-07 related to
Compensation-Retirement Benefits on April 1, 2018, the three months
ended March 31, 2018 and 2017 reflect a reclassification of $276
and $751 respectively from SG&A to Interest expense. The fiscal
years ended March 31, 2019, 2018 and 2017 reflect a
reclassification of $317, $1,301 and $2,774 respectively from
SG&A to Interest expense.
|
(3)
|
Represents income
(included in Other income (expense)) from cash received in the
period presented from the sale of Brazilian intrastate trade tax
credits that had been generated by intrastate purchases of tobacco
primarily in prior crop years. The Brazilian states of Rio Grande
do Sul and Santa Catarina permit the sale or transfer of excess
credits to third parties subject to approval by the related tax
authorities. The Company has long-term agreements with these
Brazilian state governments regarding the amounts and timing of
credits that can be sold. Intrastate trade tax credits that are not
able to be sold under existing agreements are capitalized into the
cost of the current crop and are expensed as cost of goods and
services sold as that crop is sold.
|
(4)
|
Includes expenses
incurred associated with the development and initial implementation
of the "One Tomorrow" business transformation strategy, including
business development expenses consisting of legal, strategic
consulting, business brokerage and other professional fees,
communications expenses consisting principally of fees to branding
consultants and for translation services, and human resources
expenses, including primarily professional fees related to
recruiting and employee communications.
|
(5)
|
Includes expenses
incurred associated with the internal reorganization of legal
entities within the leaf tobacco segments of the company to align
with operations, including legal, strategic and tax consulting
expenses.
|
(6)
|
Includes consulting
expenses incurred associated with the implementation of the 2017
U.S. Tax Reform Act, which became effective January 1,
2018.
|
(7)
|
Related to a former
Brazilian subsidiary that is now deconsolidated following the
completion of a joint venture in March 2014.
|
(8)
|
The initial impact of
the recently imposed Argentinian Excise Tax was $319 and $2,818 for
the quarter and fiscal year ended March 31, 2019. The cost of the
newly imposed excise tax could not be addressed with customers due
to the timing of enactment and the nature of our customer
contracts. Customer contracts for the upcoming fiscal year
contemplate the newly imposed excise tax.
|
(9)
|
Adjusted EBITDA of
our former green leaf sourcing operation in Kenya is calculated on
the same basis as Adjusted EBITDA presented in this table. In
fiscal year 2016 we decided to exit green leaf sourcing in the
Kenyan market as part of our restructuring program.
|
RECONCILIATION OF
COMBINED LEAF SEGMENTS ADJUSTED EBITDA ("LEAF SEGMENTS ADJUSTED
EBITDA")(1) (Unaudited)
|
|
|
Three Months
Ended
|
Fiscal Year
Ended
|
(in
thousands)
|
March 31,
2019
|
March 31,
2018
|
March 31,
2017
|
March 31,
2019
|
March 31,
2018
|
March 31,
2017
|
Leaf - North America
segment Operating income
|
$
|
2,225
|
|
$
|
12,983
|
|
$
|
6,967
|
|
$
|
10,113
|
|
$
|
26,446
|
|
$
|
15,333
|
|
Leaf - Other Regions
segment Operating income
|
42,170
|
|
23,077
|
|
26,529
|
|
112,180
|
|
88,742
|
|
72,009
|
|
Total Combined Leaf
Segments Operating Income
|
44,395
|
|
36,060
|
|
33,496
|
|
122,293
|
|
115,188
|
|
87,342
|
|
Less: Debt retirement
benefit(2)
|
—
|
|
—
|
|
(2,639)
|
|
(1,633)
|
|
(2,867)
|
|
(300)
|
|
Plus: Interest
income
|
785
|
|
976
|
|
2,270
|
|
3,367
|
|
3,271
|
|
8,157
|
|
Plus: Equity in net
income of investee companies
|
2,525
|
|
1,694
|
|
(477)
|
|
7,408
|
|
8,947
|
|
213
|
|
Less: Net income
(loss) attributable to noncontrolling interests
|
384
|
|
(146)
|
|
(216)
|
|
(108)
|
|
(434)
|
|
(343)
|
|
Plus: Depreciation
and amortization expense
|
7,997
|
|
8,344
|
|
8,617
|
|
32,760
|
|
33,189
|
|
34,476
|
|
Leaf Segments
EBITDA(1)
|
55,318
|
|
47,220
|
|
46,761
|
|
167,569
|
|
163,896
|
|
130,831
|
|
Plus: Reserves for
(recoveries on) doubtful customer receivables
|
4,685
|
|
(29)
|
|
(2,744)
|
|
6,749
|
|
(152)
|
|
(5,545)
|
|
Plus: Non-cash
employee stock based compensation
|
278
|
|
305
|
|
371
|
|
1,190
|
|
1,109
|
|
1,551
|
|
Less: Other
income
|
734
|
|
4,470
|
|
584
|
|
13,989
|
|
14,379
|
|
4,896
|
|
Plus: Fully reserved
recovery of tax(3)
|
3,567
|
|
4,937
|
|
3,167
|
|
10,418
|
|
11,835
|
|
9,356
|
|
Plus: Restructuring
and asset impairment charges
|
1,556
|
|
382
|
|
307
|
|
4,946
|
|
382
|
|
1,375
|
|
Plus: Costs
associated with reorganization of legal entities(4)
|
613
|
|
267
|
|
—
|
|
1,543
|
|
469
|
|
—
|
|
Plus: Costs
associated with the 2017 U.S. Tax Reform Act(5)
|
424
|
|
506
|
|
—
|
|
1,277
|
|
519
|
|
—
|
|
Plus: Debt retirement
benefit(2)
|
—
|
|
—
|
|
(2,639)
|
|
(1,633)
|
|
(2,867)
|
|
(300)
|
|
Plus: Amortization of
basis difference - CBT investment(6)
|
440
|
|
354
|
|
310
|
|
1,551
|
|
1,519
|
|
1,518
|
|
Plus: One time impact
of newly imposed Argentinian Excise Tax(7)
|
319
|
|
—
|
|
—
|
|
2,818
|
|
—
|
|
—
|
|
Plus: Kenyan
investigation legal & professional costs
|
8
|
|
49
|
|
1,606
|
|
308
|
|
1,980
|
|
7,171
|
|
Less: Kenyan green
leaf operation Adjusted EBITDA(8)
|
(302)
|
|
107
|
|
(1,625)
|
|
(882)
|
|
(2,329)
|
|
(8,013)
|
|
Leaf Segments
Adjusted EBITDA(1)
|
$
|
66,776
|
|
$
|
49,414
|
|
$
|
48,180
|
|
$
|
183,629
|
|
$
|
166,640
|
|
$
|
149,074
|
|
|
(1)
|
Leaf Segments EBITDA
and Leaf Segments Adjusted EBITDA are not measures of results of
operations under generally accepted accounting principles in the
United States ("U.S. GAAP") and should not be considered as an
alternative to other U.S. GAAP measurements. We have presented Leaf
Segments EBITDA and Leaf Segments Adjusted EBITDA to present
combined information for the Leaf - North America and Leaf - Other
Regions segments for the items identified above because we believe
that it would be helpful to the readers of our financial
information to understand the impact of these items on the reported
results of the Company's leaf tobacco reportable segments separate
from the other reportable segment. This presentation provides
readers with disaggregated information adjusted for the sporadic
impact of the various items identified above. Management
acknowledges that there are many items that impact reported results
and this list is not intended to present all items that may have
impacted these results. These non-GAAP measures and any ratios
calculated based on these measures are not necessarily comparable
to similarly-titled measures used by other companies. Leaf Segments
EBITDA and Leaf Segments Adjusted EBITDA as presented may not equal
column or row totals due to rounding.
|
(2)
|
Allocation of benefit
based on total consolidated assets.
|
(3)
|
Represents income
(included in Other income (expense)) from cash received in the
period presented from the sale of Brazilian intrastate trade tax
credits that had been generated by intrastate purchases of tobacco
primarily in prior crop years. The Brazilian states of Rio Grande
do Sul and Santa Catarina permit the sale or transfer of excess
credits to third parties subject to approval by the related tax
authorities. The Company has long-term agreements with these
Brazilian state governments regarding the amounts and timing of
credits that can be sold. Intrastate trade tax credits that are not
able to be sold under existing agreements are capitalized into the
cost of the current crop and are expensed as cost of goods and
services sold as that crop is sold.
|
(4)
|
Includes expenses
incurred associated with the internal reorganization of legal
entities within the leaf tobacco segments of the company to align
with operations, including legal, strategic and tax consulting
expenses.
|
(5)
|
Includes consulting
expenses incurred associated with the implementation of the 2017
U.S. Tax Reform Act, which became effective January 1, 2018.
Allocation of costs based on total consolidated
SG&A.
|
(6)
|
Related to a former
Brazilian subsidiary that is now deconsolidated following the
completion of a joint venture in March 2014.
|
(7)
|
The impact of the
recently imposed Argentinian Excise Tax was $319 and $2,818 for the
quarter and fiscal year ended March 31, 2019, respectively. The
cost of the newly imposed excise tax could not be addressed with
customers due to the timing of enactment and the nature of our
customer contracts. Customer contracts for the upcoming fiscal year
contemplate the newly imposed excise tax.
|
(8)
|
Adjusted EBITDA of
our former green leaf sourcing operation in Kenya is calculated on
the same basis as Adjusted EBITDA presented in this table. In
fiscal year 2016 we decided to exit green leaf sourcing in the
Kenyan market as part of our restructuring program.
|
RECONCILIATION OF
OTHER PRODUCTS AND SERVICES SEGMENT ADJUSTED EBITDA ("ADJUSTED
EBITDA")(1) (Unaudited)
|
|
|
Three Months
Ended
|
Fiscal Year
Ended
|
(in
thousands)
|
March 31,
2019
|
March 31,
2018
|
March 31,
2017
|
March 31,
2019
|
March 31,
2018
|
March 31,
2017
|
Other Products and
Services segment Operating income
|
(13,774)
|
|
(3,284)
|
|
—
|
|
(35,039)
|
|
(3,284)
|
|
—
|
|
Less: Debt retirement
benefit(2)
|
—
|
|
—
|
|
—
|
|
(121)
|
|
(108)
|
|
—
|
|
Plus: Interest
income
|
255
|
|
—
|
|
—
|
|
261
|
|
—
|
|
—
|
|
Plus: Equity in net
income of investee companies
|
213
|
|
457
|
|
38
|
|
2,182
|
|
324
|
|
(362)
|
|
Less: Net loss
attributable to noncontrolling interests
|
(316)
|
|
(96)
|
|
—
|
|
(593)
|
|
(96)
|
|
—
|
|
Plus: Depreciation
and amortization expense
|
863
|
|
409
|
|
—
|
|
2,987
|
|
409
|
|
—
|
|
Other Products and
Services segment EBITDA(1)
|
(12,127)
|
|
(2,322)
|
|
38
|
|
(28,895)
|
|
(2,347)
|
|
(362)
|
|
Plus: Reserves for
doubtful customer receivables
|
—
|
|
—
|
|
—
|
|
72
|
|
—
|
|
—
|
|
Plus: Non-cash
employee stock based compensation
|
111
|
|
15
|
|
—
|
|
354
|
|
25
|
|
—
|
|
Less: Other
income
|
10
|
|
3
|
|
—
|
|
228
|
|
3
|
|
—
|
|
Plus: Costs
associated with transformation related to "One Tomorrow" new
business initiatives, not anticipated to be recurring
costs(3)
|
5,338
|
|
1,997
|
|
150
|
|
8,127
|
|
6,593
|
|
150
|
|
Plus: Costs
associated with the 2017 U.S. Tax Reform Act(4)
|
169
|
|
25
|
|
—
|
|
380
|
|
12
|
|
—
|
|
Plus: Debt retirement
benefit(2)
|
—
|
|
—
|
|
—
|
|
(121)
|
|
(108)
|
|
—
|
|
Other Products and
Services Segments Adjusted EBITDA(1)
|
$
|
(6,519)
|
|
$
|
(288)
|
|
$
|
188
|
|
$
|
(20,311)
|
|
$
|
4,172
|
|
$
|
(212)
|
|
|
(1)
|
Other Products and
Services Segment EBITDA and Other Products and Services Segment
Adjusted EBITDA are not measures of results of operations under
generally accepted accounting principles in the United States
("U.S. GAAP") and should not be considered as an alternative to
other U.S. GAAP measurements. We have presented these non-GAAP
measures to adjust for the items identified above because we
believe that it would be helpful to the readers of our financial
information to understand the impact of these items on the reported
results of the Company's Other Products and Services Segment,
separate from its other reportable segments. This presentation of
Other Products and Services Segment EBITDA and Other Products and
Services Segment Adjusted EBITDA provides readers with
disaggregated information adjusted for the sporadic impact of
various items identified above. Management acknowledges that there
are many items that impact reported results and this list is not
intended to present all items that may have impacted these results.
Other Products and Services Segment EBITDA and Other Products and
Services Segment Adjusted EBITDA and any ratios calculated based on
these measures are not necessarily comparable to similarly-titled
measures used by other companies. Other Products and Services
Segment EBITDA and Other Products and Services Segment Adjusted
EBITDA as presented may not equal column or row totals due to
rounding.
|
(2)
|
Allocation of benefit
based on total consolidated assets.
|
(3)
|
Includes expenses
incurred associated with the development and initial implementation
of the "One Tomorrow" business transformation strategy, including
business development expenses consisting of legal, strategic
consulting, business brokerage and other professional fees,
communications expenses consisting principally of fees to branding
consultants and for translation services, and human resources
expenses, including primarily professional fees related to
recruiting and employee communications.
|
(4)
|
Includes consulting
expenses incurred associated with the implementation of the 2017
U.S. Tax Reform Act, which became effective January 1, 2018.
Allocation of costs based on total consolidated
SG&A.
|
View original
content:http://www.prnewswire.com/news-releases/pyxus-international-inc-reports-fourth-quarter-and-fiscal-year-2019-results-300867993.html
SOURCE Pyxus International, Inc.